U.S. bond funds post first weekly inflow in five months

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A U.S. one dollar banknote is seen in front of displayed stock graph in this illustration

(Reuters) – U.S. bond funds attracted net inflows in the week to June 1, after five months of outflows, as fears eased over the Federal Reserve’s aggressive monetary tightening measures and signs emerged that inflation may have peaked.

According to Refinitiv Lipper data, investors purchased U.S. bond funds worth a net $7.09 billion in their first week of net buying since Jan. 5.

Graphic: Fund flows: US equities, bonds and money market funds – https://fingfx.thomsonreuters.com/gfx/mkt/myvmnwrnnpr/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg

U.S. benchmark 10-year yield hit a six-week low last week after minutes from the U.S. central bank’s most recent policy meeting hinted at the potential for a pause in interest rate hikes later in the year, which was also supported by weaker economic data and a slower inflation growth.

Investors hope that U.S. jobs data – due on Friday – might sway the Federal Reserve to slow its aggressive pace of interest rate hikes in the coming months.

Investors purchased U.S. taxable bond funds worth $4.16 billion and municipal funds worth $2.24 billion.

U.S. high yield bond funds obtained $5.61 billion, marking the biggest weekly inflow since June 2020, while inflation protected funds saw outflows of $246 million, which compared with inflows of $1.04 billion a week earlier.

Graphic: Fund flows: US bond funds – https://fingfx.thomsonreuters.com/gfx/mkt/zdvxoweonpx/Fund%20flows%20US%20bond%20funds.jpg

Meanwhile, U.S. equity funds secured $7.22 billion, marking the biggest weekly inflow since March 23.

U.S. large-, small- and mid-cap equity funds, all obtained inflows, amounting $3.01 billion, $0.98 billion and $363 million, respectively.

Value funds secured inflows for second week in a row, worth $1.41 billion, while growth funds faced outflows of $3.95 billion.

Graphic: Fund flows: US growth and value funds – https://fingfx.thomsonreuters.com/gfx/mkt/movanzrnjpa/Fund%20flows%20US%20growth%20and%20value%20funds.jpg

Healthcare and, metals & mining attracted $959 million and $482 million in net buying, while financials saw capital outgo of $1.08 billion.

Graphic: Fund flows: US equity sector funds – https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgzegwpb/Fund%20flows%20US%20equity%20sector%20funds.jpg

Meanwhile, U.S. money market funds posted outflows of $8.73 billion after purchases of $43.7 billion in the previous week.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathyin Bengaluru; Editing by Aditya Soni)